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China

Binance CEO Changpeng Zhao sues Sequoia Capital for Damages

Binance CEO Changpeng Zhao (CZ) is firing back at Sequioa Capital; suing them for damages after their case against him was dismissed.

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sues Sequoia Capital for Damages

Binance CEO Changpeng Zhao (CZ) is firing back at Sequioa Capital, suing them for damages after their case against him was dismissed.

The news broke after Coindesk gained access to the filing made by CZ on May 20th in Hong Kong, in which he claimed the action taken by Sequioa Capital’s investors, had hit him personally and financially.

According to court documents, the hearing for the case, HCMP 2770/2017, will take place on June 25 between Zhao and SCC Venture VI. The hearing will decide if CZ “has sustained any and what damages” resulting from the injunction order Sequoia obtained on Dec 27, 2017, which stopped Zhao from raising capital from other investors until March 1, 2018.

Sequioa Capital V Changpeng Zhao

For those who may not remember, the scandal began when Sequoia Capital obtained the December 2017 injunction order in an ex parte or unilateral procedure. The company failed to notify Zhao and then filed a notice for arbitration in January 2018 as a claimant against CZ.

The accusations against CZ stemmed from what they believed to be a breach of contractual agreement and exclusivity after he began talks with IDG Capital.

Yet, after an April 11th hearing, which landed in favor of CZ, the situation began to change. A Deputy High Court Judge ruled in a judgment on April 24 that Sequoia “was wrong to pursue the ex parte application without notice to Zhao,” due to the lack of explanation or evidence as to why no efforts were made to involve both parties.

However, the case was not over for CZ and he remained in limbo. Sequioa continued their pursuit of arbitration at the Hong Kong International Arbitration Center. A resolution was finally made on Dec 12, 2018 as the tribunal dismissed Sequoia’s claims. Zhao had not breached exclusivity as the talks with IDG Capital were for a Series B round financing, not Series A as had been alleged.

CZ fires back

Following this protracted case, CZ has, according to his damages filing, seen his reputation and finances hit due to his lack of ability to look for investments. Zhao alluded to this in his new filing, saying:

“The injunction order has caused loss to me for which I am entitled to reasonable compensation by Sequoia. In particular, I have suffered i) a loss of chance to raise capital through successive rounds of financing at increasing high valuations; and ii) damage to my reputation.”

Sequoia Capital China is yet to respond to a request for comment.

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